Malaysia - Turkey Free Trade Agreement (MTFTA)

Friday, 15 January 2016 10:24

Malaysia-Turkey Free Trade Agreement (MTFTA)

Background

·The First meeting of the Malaysia-Turkey Free Trade Agreement (MTFTA) was held in Ankara on 31 May – 1 June 2010. Both sides agreed negotiating a Free Trade Agreement would be mutually beneficial and will provide added impetus required in increasing bilateral trade flows as well as enhancing the overall bilateral economic and trade relations between the two countries.

·A total of nine (9) rounds of MTFTA negotiations were held with the final or concluding round held on 13-15 January in Ankara, Turkey.

·The Agreement later was signed by YB. Dato' Sri Mustapa Mohamed Minister of International Trade and Industry, Malaysia and Hon. Nihat Zeybekci, Minister of Economy of The Republic of Turkey on 17 April 2014 in Ankara, Turkey.

·The Agreement was later come into effect on 1 August 2015. With the entry into force of this Agreement, exporters from Malaysia and Turkey will be able to enjoy preferential access for their products in each other's countries. Both Malaysia and Turkey will eliminate and bind duties on 70% of the tariff lines, upon entry into force of the Agreement. After a period of eight years, duties will be reduced/eliminated for almost 86% of tariff lines'

·The Agreement covers the following chapters:

oMarket Access

oRules of Origin

oCustoms Cooperation

oTechnical Barrier to Trade

oSanitary and Phytosanitary

oTrade Remedy

oEconomic and Technical Cooperation

oLegal Institution

Trade In Goods

·The Agreement outlines commitments from both countries on liberalization of trade in goods. Malaysia and Turkey will progressively reduce or eliminate tariffs on substantial number of products traded between both countries.

Malaysia's commitment involves tariff reduction/elimination on 98.86 % from the total tariff lines based on modalities as follows:

Modalities

Description

Tariff lines

%

Fast Track (FT)

Immediate Elimination Upon Entry Force of MTFTA enters into force.

7317

70.38

Normal Track (NT)

Gradually reduced and eliminated on the third year from date of MTFTA enter into force.

1040

10.00

Sensitive Track (ST)

Gradually reduced and eliminated on the fifth year from date of MTFTA enter into force.

1725

16.59

Highly Sensitive Track (HST)

Gradually reduced on the eighth year from the date of MTFTA enter into force.

196

1.89

Malaysian importers may enjoy the benefit from immediate elimination of duties for the following products:

oAnimal or vegetables fats and oils and its products (except selected palm oil and its products)

oMiscellaneous edible preparations

oSugar and sugar confectionaries

oProducts of meat, fish or crustaceans Leather and its products

oRailway or tramway locomotives, rolling stock and parts

oApparels, footwear and headgears

oAircrafts, spacecrafts, ships and boats

oSelected machineries and equipment

oSelected iron and steel and its products

oSelected textiles

oSelected electrical and electronic products

Upon realisation of the FTA within 8 years, Turkey will eliminate duties on 87% of tariff lines based on modalities as follows:

Modalities

Description

Tariff lines

%

Fast Track (FT)

Immediate Elimination Upon Entry Force of MTFTA.

8309

68.70

Normal Track (NT)

Gradually reduced and eliminated on the 3 rd year from date of MTFTA enter into force.

302

2.50

Sensitive Track (ST)

Gradually reduced and eliminated on the 5th year from date of MTFTA enter into force.

877

7.25

Highly Sensitive Track (HST)

Gradually reduced on the 8th year from the date of MTFTA enter into force.

898

7.43

Malaysian exports that will benefit from immediate elimination of duties include:

oE&E

oChemicals

oTextiles machinery

oPlastic

orubber products

oselected fisheries and tropical fruits

owood and wood products

oselected automotive parts

oaircrafts, space crafts, ships and boats

omineral and ores

oglass, glassware and ceramic products

omiscellaneous manufactured articles

·In the case of Malaysia, the elimination of duties by Turkey through MTFTA will compensate for the withdrawal of the GSP benefits previously offered by Turkey until 31 December 2013. Therefore, with the MTFTA, Malaysian exporters can continue to gain market access at preferential duties and remain competitive in exporting to Turkey, offering further advantages to Malaysian exporters.

·Commitments by the countries in trade in goods are reflected in the following schedule:

·As Turkey is a member to EU Customs Union, both parties therefore agreed to adopt EU 2010 GSP rules, pending the conclusion of the Malaysia-EU FTA. These rules are trade-facilitative, and advantageous for Malaysian exports.

·For list of working or processing required to be carried out on non-originating materials (Annex 4-2), please click this link.

Benefits

·Turkey is an attractive market for Malaysian products as it has a large population base of 74 million people and GDP per capita of USD 10,782. Malaysia and Turkey can provide advantages to each other as Malaysia has a strategic location within ASEAN while Turkey is a member of the EU Customs Union.

·In 2014, Malaysia exports of timber and timber products to Turkey totalled RM 39.5 million, an increase of 7% from RM 36.8 million in 2013. Major products exported to Turkey were:

HS Code

Description

2014

(RM Mil)

% Change 14/13

4401

Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; wood in chips or particles; sawdust and wood waste and scrap, whether or not agglomerated in logs, briquettes, pellets or similar forms.

23.6

26

9401

Seats (other than those of heading 94.02), whether or not convertible into beds, and parts thereof.